Article: Twins Must Get Creative To Lure Darvish

[laloesch]

 

The problem with playing in a state with lower taxes is you have to live there most of the year.

 

Doesn't stop Joe Mauer from doing it.  He lives in Florida the entire offseason.

[laloesch]

 

Players in the upper salary echelons sometimes set up charitable trusts and the like. An extra $3M to feed some additional hungry children might still get such a player's attention.

 

It also reduces there tax bracket. 

[Doomtints]

 

Oh I agree.  I'd rather see an Alex Cobb-type PLUS a good reliever than Darvish, for the same money. It's just funny...because that's how we Minnesotans have come to see our sports teams.  What will go wrong?  We're all waiting for the Vikings carriage to turn into a pumpkin (even though I don't think it will).  Wolves are disappointing.  Gopher basketball loses at Nebraska and almost loses to Drake......we tend to have a doomsday outlook on our sports.  Even though our Twins have won two WS in my lifetime.

 

I feel like the Vikings are about to go on a 1970s-like run where they dominate the league for a few years. (But, bear in mind, they never won a championship in that era....) They look a hell of a lot like the 2000 Ravens right now, and I think they can beat anybody in the NFC. What worries me is Pittsburgh, I think they could beat the Patriots too.

I don't follow the Wolves or the Wild.

[Nick Nelson]

 

I do. But he is the top free agent. The way to win the bidding is to win the bidding. I am just being realistic here. It's about the money.

These posts never once mentioned anyone being cheap. I never implied it either. The point is simple, if you want the most expensive asset, you have to pay up.

But top free agents HAVE opted for an offer with slightly less money because there were other factors that swayed them. That's far from unprecedented. So that's what I'm angling for here. How might the Twins make it happen in this case?

Not all of these scenarios necessarily equate to the Twins winning with a lower bid, either. The deferred money concept, for instance, could enable MN to offer the highest total money while staying within plausible payroll constraints during his contract. 

[Tomj14]

 

It also reduces there tax bracket. 

Doesn't reduce their tax bracket, it reduces their tax burden, but it is still money coming out of their accounts, and many believe they can do better to help people then giving it to the state or Feds, and who are we to argue to that point?

[USAFChief]

 

Doesn't reduce their tax bracket, it reduces their tax burden, but it is still money coming out of their accounts, and many believe they can do better to help people then giving it to the state or Feds, and who are we to argue to that point?

Not only doesn't it reduce a tax bracket, it increases the amount of money they don't have.

 

If you give $3M to charity, you're out $3M.  

 

If you keep that $3M, and pay taxes on it, you keep some portion of the $3M.  

 

So you end up with more money by not donating.

 

Giving to charity is giving to charity.  It's not about taxes.

[Doomtints]

 

Doesn't reduce their tax bracket, it reduces their tax burden, but it is still money coming out of their accounts, and many believe they can do better to help people then giving it to the state or Feds, and who are we to argue to that point?

 

I don't want to digress this too far, but to answer your last question, we are American citizens, and we have a say in taxation and spending.

 

If a "millionaire" chooses to contribute to infrastructure (roads, bridges, etc.,), they will be toll roads/toll bridges. If a "millionaire" chooses to contribute to education, it will be to higher education or private education. Sure, there are exceptions, but not many.

 

I see where your proclivities are (and I know changing your view would be impossible), but if you ever find yourself in Chicago I can take you to some parties with this privileged class and you will learn quickly that they are not interested in helping people outside of their class -- and they have learned how to determine if someone is in their class within 2 minutes of talking to them. Unless you can work your way through their coded language, you will have a lot of people walk away from you in mid-sentence, sometimes calling you stupid to your face before doing so!

Edited December 18, 2017 by Doomtints

[Otto von Ballpark]

 

In January of 2016, when the Baltimore Orioles signed slugger Chris Davis to a seven-year, $164 million contract, they deferred $42 million of it. He receives $3.5 million every year from 2023-32, and then $1.4 million annually through 2036.

This reduced Baltimore's actual commitment on the ledgers to $119 million over the seven years, or $17 million AAV. The deferral is interest-free, which works in the club's favor, but Davis can look forward to steady income well into his retirement.

 

 

When you picked a contract as an example to sign somebody couldn't you have found someone who did well after signing the contract?

 

Perhaps a more palatable example of deferred money is Max Scherzer:

https://www.fangraphs.com/blogs/max-scherzer-and-when-210-million-isnt-210-million/

 

Or even Zack Greinke:

https://www.usatoday.com/story/sports/mlb/2015/12/09/greinkes-d-backs-deal-includes-62-5m-in-deferred-salaries/77077480/

[rdehring]

 

Or Joe Mauer.  Florida is his home away from home.  When he's not playing baseball he doesn't live in Minnesota.

I know he bought a fantastic home in Deephaven (or next to it).  Was that last year?  Anyway, I wonder if he might live there year round when his kids start going to school?

[cmoss84]

I would be very hesitant to offer a 4, 5, or even 6 year deal. I would rather overpay on a 2 or 3 year deal that may or may not include a player option. Something like 2/66 with a player option for 3rd year, making it a 3/99 contract. 

 

I really like Darvish and would love getting him, but he is no spring chicken anymore. 

[rdehring]

CNBC just had a report on the new tax law effect on professional athletes.  They stated that two current deductions will no longer be allowed under the law: 1) Agent fees paid by the player will no longer be a deductible expense; and 2) Fines levied by the league will not be deductible.  Guess Gardy better stay in games in Detroit!

 

Imagine agents could get around their fee by figuring out a way to have the teams pay them directly.  

 

 

[Mike Sixel]

 

I would be very hesitant to offer a 4, 5, or even 6 year deal. I would rather overpay on a 2 or 3 year deal that may or may not include a player option. Something like 2/66 with a player option for 3rd year, making it a 3/99 contract. 

 

I really like Darvish and would love getting him, but he is no spring chicken anymore. 

 

Why would he sign a three year deal?

[drivlikejehu]

The Twins have an enormous amount of payroll space, even for their limited budget, after 2018. I would offer Darvish a contract that included a significant signing bonus to be paid out in 2019 and 2020 . . . that would prevent his contract from being too burdensome as the Twins' young players get more costly.

[Deduno Abides]

I have no idea how to gauge the frequency, to discuss this more meaningfully. Anecdotal evidence won't suffice, and baseball-reference.com fails to keep proper stats. I'll stand by my take, for now.

Well, you’d hear about them, if they existed, at least most of them. Further, based on personal experience with a great athlete with a great foundation, ones you do hear about often don’t do much. It’s actually hard work to have a good foundation.

 

Regardless, I will agree with you that a foundation may be the reason some athletes want more money. However, beyond that supposition, usually it’s simply the money. Therefore, I too will stand by my take - after an annual salary of, say, $20M, you’d think someone would differentiate his choices on factors other than money, but it unfortunately does not seem to happen that much.

[cmoss84]

 

Why would he sign a three year deal?

He probably won't. But if he does, it might be because he is being offered far more/year in the 3 year deal...like 33 vs. 22-25. Especially if the 3rd year is a player option-he could still have time for one more "large" contract.

[Mr. Brooks]

I am pretty sure every millionaire has contributed more to schools, parks and police then I or most people have.

Joe Mauer made 23 million last year, 2.3 went to a agent, which leaves him around 20, lets say he figures out how to write off a couple of million on that and the final number is 18. Half of that would be taxed in MN, around 900K, another 700K to other states and 7 plus million to the feds. (just in income) I have no hard feeling against them trying to reduce that burden.

No agent in mlb makes 10% commission. Most are around 2-3%, Scott Boras made the most (#'s from 2013) at 4.7%.

[snap4birds]

 

It is seldom that anyone ever mentions taxes when talking about signing players.  Yet, they are and can be a major factor in these discussions.  May not be for the player, but certainly his advisors.

 

I understand that players file tax returns in all markets in which they play.  But half their games are at home, thus, half their income is taxed in the State of their home team.  So that's a negative for Minnesota versus lots of teams...although not the teams from places like New York or California.  And that hit will be bigger now that it appears State and local tax deductions are going to be limited.  After all, $27,000,000 at almost ten percent is a lot of money...especially when your Federal deduction looks to be limited to $10k.  

 

Will this be a negative for the Twins?  Or can they get creative and find a way to help their pitch?

Ladies and Gentlemen, I present your South Dakota Twins, starring Yu Darvish!  Maybe set up a rotation where he only pitches home games, or in other states that have low income taxes.....

 

I think this is a fairly new phenomenon, prior to maybe 10 years ago pro athletes just paid their income tax where they played.  Now it has to be pretty complicated.  If a pitcher never faces the Tigers, does he not have to file in Michigan, or does he have to prorate his earnings out to the percentage of games his team played against the Tigers?  

[nytwinsfan]

Uggh:

 

[Squirrel]

Mod note: Please stick to the topic at hand and let's not take the tax tangent any further. You are welcome to start your own thread in the sports bar about athletes and their pay and their taxes in the Sports Bar if you want to discuss that issue further. Thanks.

[Hosken Bombo Disco]

 

Uggh:

 

So.... Cubs exploring free agent market? Heyman for the win!

[nytwinsfan]

 

So.... Cubs exploring free agent market? Heyman for the win!

I mean, it is a bit more specific than that. If you look at the tweet he linked, they are literally flying to Texas to meet with him in person.

[Hosken Bombo Disco]

Well, that's a little different. I think the Twins still have the advantage. (though would still prefer a trade for a guy like Cole than tie up 100MM for the next half decade)

[h2oface]

This from Bollinger:

 

"Levine said the Twins will continue to be patient yet aggressive in their pursuit of a front-line starting pitcher to join Ervin Santana and Jose Berrios. The Twins have yet to make an offer to Darvish, but he's not expected to make a decision anytime soon.

"The top end of the market tends to be more patient, because it's not like interest is going to evaporate," Levine said. "I think there are two tiers, with Darvish and Arrieta linked and then Lynn and Cobb linked. Time will tell how much they impact one another."

 

I just don't get how not making an offer is aggressive, at all. Seems that is just the opposite of being aggressive. One can't make a decision on it or accept an offer that is not made! If you want something, you make an offer. Before it is too late. Change it if it is rejected. But if you want Darvish..... make an offer!

Edited December 19, 2017 by h2oface

[Riverbrian]

I imagine that the free agent signing dance has a certain timeline to it that will go at it's own pace. I'm not going to worry because I'm sure Falvey and Lavine have the phone number of his agent. 

 

However... At this point... I'd prefer if Falvey and Lavine find out exactly where Yu Lives and then buy the homes on either side of him.

 

Falvey moves into one and Lavine moves into the other. Exchange recipes... host block parties and give sage advice over the fence. 

 

http://www.rvgfanatic.com/mediac/400_0/media/DIR_1188315/WilWilJr.JPG

[Brandon]

Also take into account the culture, Jaoenese value relationships alot in business.

[jharaldson]

The Twins are going to get a 1 time cash infusion in Q1 of 2018 of between $50-$68 million due to the sale of BAMtech by MLB. 

 

http://mlb.nbcsports.com/2017/12/15/each-owner-will-get-at-least-50-million-in-early-2018-from-he-sale-of-bamtech/

 

An innovative way to take advantage of this would be to offer Darvish a 5 year/$140 million contract but make $60 million a signing bonus.  The signing bonus would be taxed at Texas rates so he saves money plus he can invest that money and make it grow for him instead of waiting for it. It would also be good for the Twins because the yearly rate on that contract would go from $28 million to $16 million and give them more flexibility in the future.  

Edited December 19, 2017 by jharaldson

[Mr. Brooks]

The Twins are going to get a 1 time cash infusion in Q1 of 2018 of between $50-$68 million due to the sale of BAMtech by MLB.

 

http://mlb.nbcsports.com/2017/12/15/each-owner-will-get-at-least-50-million-in-early-2018-from-he-sale-of-bamtech/

 

An innovative way to take advantage of this would be to offer Darvish a 5 year/$140 million contract but make $60 million a signing bonus. The signing bonus would be taxed at Texas rates so he saves money plus he can invest that money and make it grow for him instead of waiting for it. It would also be good for the Twins because the yearly rate on that contract would go from $28 million to $16 million and give them more flexibility in the future.

The Twins max out payroll at just over 50% of revenue, so the bonus would have to be $30 million, not 60.

[Mr. Brooks]

Besides, he's going to get a lot more than $140 million, IMO.

[Mike Sixel]

 

The Twins are going to get a 1 time cash infusion in Q1 of 2018 of between $50-$68 million due to the sale of BAMtech by MLB. 

 

http://mlb.nbcsports.com/2017/12/15/each-owner-will-get-at-least-50-million-in-early-2018-from-he-sale-of-bamtech/

 

An innovative way to take advantage of this would be to offer Darvish a 5 year/$140 million contract but make $60 million a signing bonus.  The signing bonus would be taxed at Texas rates so he saves money plus he can invest that money and make it grow for him instead of waiting for it. It would also be good for the Twins because the yearly rate on that contract would go from $28 million to $16 million and give them more flexibility in the future.  

 

Not sure the taxes work that way, but even if they do, I can't see the Twins or anyone giving out a signing bonus like that. 

[jharaldson]

 

The Twins max out payroll at just over 50% of revenue, so the bonus would have to be $30 million, not 60.

 

The Twins made that statement in the past about their yearly revenue.  They haven't had a similar 1-time payout since 1998 when the Diamondbacks and the Rays came into the league and everyone got $10 million.  I would argue that unless they have a significant 1-time capital project (minor league facilities, international facilities, IT infrastructure, etc...) that there is not a valid reason for them to apply the 50% rule to this money and it should be available for this purpose.